Inflation expectations

The Federal Reserve Bank of Cleveland reports that its latest estimate of 10-year expected inflation is 1.38 percent. In other words, the public currently expects the inflation rate to be less than 2 percent on average over the next decade.

Could somebody explain how come inflated real estate sales didn’t register as inflation? In my neighborhood, people bought less than half acre lots for $650,000. The houses they had built cost $150,000 in labor and then got sold for a million until the collapse. Now those lots are assessed by the public appraiser at $115,000 and the properties are selling at a more realistic $350,000–realistic in the sense that 50 year old houses on similar sized lots, which went for $100,000 ten years before were going for $350,000 at the height of the bubble. Does real estate speculation simply not count in the calculus of inflation?

It is in theory. Unfortunately, the Fed prefers core CPI which excludes energy. Also, a very high percentage of landlords don’t pick up utilities. Thus, Core CPI is understated when energy prices are rising.